Ian McAuley and John Menadue | Are Private Health Subsidies Worth It?

Is there some special reason the private health insurance industry is worthy of such robust government support? Ian McAuley and John Menadue on why it doesn’t add up.

When an industry has become dependent on a subsidy, it uses every means to justify its continuation, exaggerating the consequences if it is withdrawn. Political parties join the bandwagon, and governments, whatever their ideology, feel compelled to go on providing subsidies.

We’re not referring to Alcoa, Toyota or GMH. There is at least some media exposure of subsidies to the aluminium and car industries, and there is some questioning of manufacturing assistance in both the ALP and the Coalition.

Rather, it’s the private health insurance industry, which, for all the sound and fury about the means-testing of the rebate for high income earners, has once again escaped any serious scrutiny of its economic contribution and its tax-funded support — support which costs $4 billion a year, even after the modest trimming associated with means testing.